Federal Budget 2022- 2023 - Tax and Superannuation Report - Jobs Australia
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Federal Budget
2022- 2023
Tax and Superannuation Report
Kylie McEwan Clinton Fraser
Director Director
Tax & Business Services Tax & Business Services
Justin McGrath
Managing Director
Stephen Wight Stephen Kirtley
Director Director
Audit & Assurance Services Audit & Assurance Services
/ Geelong / Torquay
101 West Fyans Street, 6 Walker Street,
Newtown VIC 3220 Torquay VIC 3228 info@davidsons.com.au
PHONE: (03) 5221 6399 PHONE: (03) 5221 6399 davidsons.com.au
Contents
2022–23 Federal Budget Highlights ........................................................................................................ 4
Individuals ................................................................................................................................................ 6
Low and middle income tax offset to be increased by $420 .................................................................... 6
One-off payment to ease cost of living pressures .................................................................................... 6
COVID-19 response package — Aged care ............................................................................................... 7
Work-related COVID-19 tests tax deductible from 1 July 2021 ................................................................ 7
Paid Parental Leave scheme enhancements ............................................................................................ 8
Medicare low-income thresholds for 2021–22 ........................................................................................ 8
Increased support for affordable housing and home ownership ............................................................. 8
Business .................................................................................................................................................... 9
More COVID-19 business grants will be tax exempt ................................................................................ 9
Increased deduction for small business external training expenditure ................................................... 9
Increased deductions for digital adoption by small businesses ............................................................. 10
Apprenticeship wage subsidy extended ................................................................................................. 10
Concessional tax treatment for carbon abatement and biodiversity stewardship income ................... 10
Expanded access to unlisted company employee share schemes ......................................................... 11
PAYG income tax instalment system set for structural overhaul ........................................................... 11
Continued reforms to insolvency arrangements .................................................................................... 11
Business registry fees to be streamlined ................................................................................................ 12
Tax exemption for Australian sovereign wealth fund extended ............................................................ 12
Excise and customs duty ........................................................................................................................ 12
Temporary reduction in fuel excise ........................................................................................................ 12
COVID-19 tariff concession to be made permanent............................................................................... 13
Excise administration to be streamlined ................................................................................................ 13
Superannuation ...................................................................................................................................... 14
Extension of the reduction in superannuation minimum drawdown rates ........................................... 14
Innovation .............................................................................................................................................. 14
Agricultural innovation: expansion of “patent box” tax concession ...................................................... 14
Low emissions innovation: expansion of “patent box” tax concession.................................................. 15
Medical and biotechnology innovation: expansion of “patent box” tax concession ............................. 15
Tax administration ................................................................................................................................. 15
PAYG instalment systems to be modernised .......................................................................................... 15
Reporting of taxable payments reporting system data .......................................................................... 16
Digitalising trust and beneficiary income reporting and processing ...................................................... 16
2
Enhanced sharing of STP data................................................................................................................. 16
ATO Tax Avoidance Taskforce to be extended ....................................................................................... 17
Deferral of 2019 Budget measure on Australian Business Numbers ..................................................... 17
Not-for-profits ........................................................................................................................................ 17
Additions to deductible gift recipients list .............................................................................................. 17
Indirect tax ............................................................................................................................................. 18
Indirect tax refunds for diplomatic and consular representations ......................................................... 18
3
2022–23 Federal Budget Tax and Superannuation Highlights
The Federal Treasurer, Mr Josh Frydenberg, handed down the 2022–23 Federal Budget at 7:30pm
(AEDT) on 29 March 2022.
In an economy emerging from the pandemic, the Treasurer has confirmed an unemployment rate
of 4% and an expected budget deficit of $78 billion for 2022–23. As international uncertainties add
pressure on the cost of living, key measures in the Budget provide cost of living relief in the form
of an increased Low and Middle Income Tax Offset, a one off $250 payment for welfare recipients
and pensioners and a 6-month fuel excise relief.
Other measures for business seek to promote innovation, with expanded “patent box” tax
concessions proposed, and provide tax incentives for small business to invest in the skills of their
employees. A lower GDP uplift rate for PAYG and GST instalments has also been proposed to
support cash flows of small and medium businesses.
The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media
releases are available at ministers.treasury.gov.au. The tax, superannuation and social security
highlights are set out below.
Individuals
• The low and middle income tax offset will be increased by $420 in the 2021–22 income year
to ease the current cost of living pressures.
• A one-off payment of $250 will be made to individuals who are currently in receipt of
Australian government social security payments, including pensions, to ease cost of living
pressures.
• Additional funding will be provided over 5 years to support older Australians in the aged
care sector with managing the impacts of the COVID-19 pandemic.
• Costs of taking a COVID-19 test to attend a place of work will be tax deductible for
individuals and exempt from fringe benefits tax from 1 July 2021.
• A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing
system of 2 separate payments.
• CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors
and pensioners for the 2021–22 year announced.
• The number of guarantees under the Home Guarantee Scheme will be increased to 50,000
per year to assist home buyers who have a lower deposit.
Business
• Additional state and territory COVID-19 business support grant programs will be eligible for
tax treatment as non-assessable non-exempt income until 30 June 2022.
• Small and medium businesses will be able to deduct an additional 20% of expenditure
incurred on external training courses provided to their employees.
• Small and medium businesses will be able to deduct an additional 20% of eligible
expenditure supporting digital adoption.
• The Boosting Apprenticeship Commencements wage subsidy will be extended by 3 months.
4
• Concessional tax treatment will apply from 1 July 2022 for primary producers selling
Australian Carbon Credit Units and biodiversity certificates.
• Access to employee share schemes in unlisted companies will be expanded.
• The PAYG instalment system is set for a structural overhaul with a set GDP uplift of 2% to
apply for the 2022–23 income year.
• Additional funding will be provided to further reform insolvency arrangements, including
the insolvent trading “safe harbour”.
• Business registry fees will be streamlined over 3 years from 2023–24.
• Wholly owned Australian incorporated subsidiaries of the Future Fund Board of Guardians
will be exempt from corporate income tax.
Excise and customs duty
• Excise and excise-equivalent customs duty on petrol and diesel will be reduced by 50% from
30 March 2022 for 6 months.
• The temporary tariff concession for COVID-19 related medical and hygiene products will be
made permanent.
• Administration of fuel and alcohol excise, and excise-equivalent customs duty will be
streamlined.
Superannuation
• The 50% reduction of the superannuation minimum drawdown requirements for account-
based pensions will be extended for an additional year.
Innovation
• Corporate income from the commercialisation of patents, issued from 29 March 2022, in
respect to agricultural and veterinary (agvet) chemical products will be taxed at an effective
rate of 17% for income years starting from 1 July 2023.
• The effective tax rate of 17% for the “patent box” regime will also be expanded to include
patents that have the potential to lower emissions.
• Following on from the 2021 Federal Budget announcement of the “patent box” regime for
medical and biotechnology innovations, the concessional tax treatment will be expanded to
include certain overseas jurisdictions with equivalent patent regimes.
Tax administration
• Companies will be able to choose to have their PAYG instalments calculated based on
current financial performance, extracted from business accounting software, with some tax
adjustments.
• Businesses will be allowed the option to report taxable payments reporting system data (via
accounting software) on the same lodgment cycle as their activity statements.
• Trust and beneficiary income reporting and processing will be digitalised.
5
• IT infrastructure will be developed to allow the ATO to share single touch payroll data with
state and territory revenue offices.
• The ATO will be given funding to extend the operation of the Tax Avoidance Taskforce by 2
years.
• The start date of the 2019–20 Budget measure for holders of Australian Business Numbers
will be deferred by 12 months.
Not-for-profits
• Melbourne Business School Ltd, Advance Global Australians Ltd, Leaders Institute South
Australia Inc, St Patrick’s Cathedral Melbourne Restoration Fund, and various entities
related to Community Foundations Australia, have been added to the list of specifically
DGRs for a period beginning 1 July 2022.
Indirect tax
• The Indirect Tax Concession Scheme (ITCS) has been granted or extended to various
diplomatic and consular representations.
Individuals
Low and middle income tax offset to be increased by $420
The low and middle income tax offset (LMITO) will include a cost of living tax offset in the 2021–22
income year. The cost of living tax offset is a flat $420 to be applied to all recipients of LMITO
when they lodge their tax return.
The minimum LMITO for 2021–22 will be $675 for all individuals with a taxable income up to
$37,000.
Individuals between $37,000 and $48,000 will receive $675 plus 7.5% of the amount of the income
that exceeds $37,000.
Individuals between $48,000 and $90,000 will receive the increased maximum of $1,500.
Individuals over $90,000 in taxable income will have the maximum amount reduced by 3 cents for
every dollar above $90,000, tapering off to an offset of $420 at $126,000 taxable income.
The LMITO is a non-refundable tax offset.
Source: Budget Paper No 2, p 16; Glossy “Australia’s plan for a stronger future — Overview”, p 26.
One-off payment to ease cost of living pressures
Individuals who are currently in receipt of an Australian government allowance or pension will
receive a one-off payment of $250 in April 2022 to ease the cost of living pressures. Certain
concession card holders will also get the payment.
6The cost of living payment will be exempt from tax and will not count towards an individual’s
income for social security income test purposes.
The payment will cover individuals in receipt of the age pension, disability support pension,
parenting payment, carer payment, carer allowance, JobSeeker payment, youth allowance,
Austudy and Abstudy living allowance, double orphan pension, special benefit, farm household
allowance and eligible Veterans’ Affairs payments.
The payment will also go to individuals who hold a Pensioner concession card, a Commonwealth
seniors health card or a Veteran Gold card.
However, if an individual receives multiple pensions or allowances, they will only receive the one-
off payment once.
Source: Budget Paper No 2, p 167.
COVID-19 response package — Aged care
There will a further $458.1 million in funding over 5 years to support older Australians in aged care
and aged care workers to manage the impact of COVID-19.
Part of the funding will be directed as follows:
• Approximately $215 million over 2 years from 2021-22 to provide bonuses of up to $800 to
aged care workers in residential aged care and home care.
• Just under $125 million in 2022-23 to extend and expand funding for the Aged Care
Preparedness program that supports aged care providers to manage and prevent outbreaks
of COVID-19 and prepare providers to transition to living with COVID-19.
The funding will also be used to increase the capacity for vaccination services to residents and
staff and extend PCR testing in residential facilities for a further 3 months to 30 September 2022.
Source: Budget Paper No 2, p 88-89.
Work-related COVID-19 tests tax deductible from 1 July 2021
Costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals and
exempt from fringe benefits tax from 1 July 2021.
Legislation will be introduced to clarify that work-related COVID-19 test expenses incurred by
individuals are tax deductible. Employers will not incur fringe benefits tax if they provide COVID-19
testing to their employees for work-related purposes.
The amendments will take effect from the beginning of the 2021–22 tax year.
Source: Budget Paper No 2, p 18; Assistant Treasurer's press release “Tax deductibility of COVID-
19 test expenses”, 8 February 2022.
7Paid Parental Leave scheme enhancements
The Paid Parental Leave scheme will be overhauled by combining the current Parental Leave
Payment (18 weeks paid leave for the primary carer) and the Dad and Partner leave payment (2
weeks paid leave) into a single combined Paid Parental Leave pay scheme of up to 20 weeks.
Leave will be fully flexible and both parents will be able to choose how they split the leave periods
between themselves.
The Paid Parental Leave can be taken any time within 2 years of the birth or adoption of their
child.
The income test will also be broadened to have an additional household income eligibility test.
Source: Budget Paper No 2, p 169.
Medicare low-income thresholds for 2021–22
The CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors
and pensioners for the 2021–22 year of income have been announced. The new thresholds are:
Medicare levy low-income threshold (at or below which no
Medicare levy payable) 2021–22 (2020–21)
Class of people Single Family
Individual $23,365 ($23,226) $39,402 ($39,167)
Senior Australians and eligible
pensioners $36,925 ($36,705) $51,401 ($51,094)
Threshold increment for each
additional dependent
child/student $3,619 ($3,597)
Source: Budget Paper No 2, pp 24–25.
Increased support for affordable housing and home ownership
The number of guarantees under the Home Guarantee Scheme will be increased to 50,000 per
year for 3 years from 2022–23 and then 35,000 a year thereafter to support home buyers to
purchase a home with a lower deposit.
The guarantees will be allocated to provide:
• 35,000 guarantees per year ongoing for the First Home Guarantee (formerly the First Home
Loan Deposit Scheme)
• 5,000 places per year to 30 June 2025 for the Family Home Guarantee
8• 10,000 places per year to 30 June 2025 for a new Regional Home Guarantee that will
support eligible citizens and permanent residents who have not owned a home for 5 years
to purchase a new home in a regional location with a minimum 5% deposit.
Source: Budget Paper No 2, p 170.
Business
More COVID-19 business grants will be tax exempt
Payments from additional state and territory COVID-19 business support grant programs will be
made non-assessable non-exempt income (NANE) for income tax purposes until 30 June 2022. The
NANE treatment is to support businesses affected by state or territory lockdowns during the
pandemic.
Since the 2021–22 MYEFO, the following programs have been made eligible:
• New South Wales Accommodation Support Grant
• New South Wales Commercial Landlord Hardship Grant
• New South Wales Performing Arts Relaunch Package
• New South Wales Festival Relaunch Package
• New South Wales 2022 Small Business Support Program
• Queensland 2021 COVID-19 Business Support Grant
• South Australia COVID-19 Tourism and Hospitality Support Grant
• South Australia COVID-19 Business Hardship Grant.
Source: Budget Paper No 2, p 17.
Increased deduction for small business external training expenditure
Small and medium businesses will be able to deduct an additional 20% of expenditure incurred on
external training courses provided to their employees.
The additional deduction will apply for businesses with aggregated turnover of less than $50
million. The external training course must be delivered by an Australian entity and provided to
employees in Australia or online. In-house or on-the-job training and expenditure for persons
other than employees will be excluded.
The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022
(Budget night) until 30 June 2024. Where eligible expenditure is incurred before 1 July 2022, the
additional deduction will be claimed in the tax return for the following income year.
Source: Budget Paper No 2, pp 26–27.
9Increased deductions for digital adoption by small businesses
Small and medium businesses will be able to deduct an additional 20% of eligible expenditure
supporting digital adoption.
The additional deduction will apply for businesses with aggregated turnover of less than $50
million. Eligible expenditure will include the cost of depreciating assets and business expenses
supporting digital adoption, such as portable payment devices, cyber security systems or
subscriptions to cloud-based services. An annual cap of $100,000 will apply to expenditure eligible
for the additional deduction.
The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022
(Budget night) until 30 June 2023. Where eligible expenditure is incurred before 1 July 2022, the
additional deduction will be claimed in the tax return for the following income year.
Source: Budget Paper No 2, p 27.
Apprenticeship wage subsidy extended
The Boosting Apprenticeship Commencements wage subsidy will be extended to support
businesses and Group Training Organisations that take on new apprentices and trainees. The
subsidy will now be available to 30 June 2022. This measure will provide for an additional 35,000
apprentices and trainees. Eligible businesses will be reimbursed up to 50% of an apprentice or
trainee’s wages of up to $7,000 per quarter for 12 months.
Source: Budget Paper No 2, p 76; Glossy “Australia’s plan for a stronger future — Overview”, p 46.
Concessional tax treatment for carbon abatement and biodiversity stewardship income
Concessional tax treatment will apply from 1 July 2022 for primary producers selling Australian
Carbon Credit Units (ACCUs) and biodiversity certificates.
Proceeds from the sale of ACCUs and biodiversity certificates generated from on-farm activities
will be treated as primary production income, providing access to existing income tax averaging
arrangements and the Farm Management Deposits scheme. The taxing point of ACCUs for primary
producers that are eligible for tax averaging or the Farm Management Deposits scheme will also
be changed to the year in which they are sold. Similar treatment will be extended to biodiversity
certificates issued under the Agriculture Biodiversity Stewardship Market scheme.
Currently, proceeds from selling ACCUs are treated as non-primary production income and ACCU
holders are taxed based on annual changes in the value of their ACCUs.
The measure will apply from 1 July 2022.
Source: Budget Paper No 2, p 26.
10Expanded access to unlisted company employee share schemes
For employers that make larger offers in connection with employee share schemes in unlisted
companies, participants can invest up to:
• $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus
70% of dividends and cash bonuses, or
• any amount, if it would allow them to immediately take advantage of a planned sale or
listing of the company to sell their purchased interests at a profit.
Regulatory requirements for offers to independent contractors will be removed, where they do
not have to pay for interests.
Source: Budget Paper No 2, p 19.
PAYG income tax instalment system set for structural overhaul
The gross domestic product (GDP) uplift rate that applies to pay-as-you-go (PAYG) instalments and
GST instalments will be set at 2% for the 2022–23 income year.
The GDP adjustment factor is usually calculated by using data from the Australian Bureau of
Statistics and is based on GDP changes over the previous 2 calendar years. Using this statutory
formula, it was expected that the GDP uplift for PAYG instalments would be much higher, causing
potential cash flow issues for businesses. The 2% uplift rate will apply to instalments for the 2022–
23 income year that fall due after amending legislation receives assent.
The current annual aggregated turnover thresholds for using the GST instalment method is $10
million and $50 million for PAYG instalments.
Source: Budget Paper No 2, p 29.
Continued reforms to insolvency arrangements
Additional funding will be provided to further reform insolvency arrangements. This includes:
• $22 million to implement reforms to unfair preference rules, including enhancing the
Assetless Administration Fund, from 1 July 2023
• $7 million to clarify the treatment of trusts with corporate trustees under Australia’s
insolvency laws, and
• $0.8 million in 2022–23 to implement the government’s response to the recommendations
of the Review of the insolvent trading safe harbour, released in March 2022.
Source: Budget Paper No 2, p 171.
11Business registry fees to be streamlined
Fees associated with Australia's business registers will be streamlined over 3 years from 2023–24.
Company registration and lifecycle management are scheduled to move to a modernised platform
in September 2023. These reforms to Australia's business registers will:
• remove the companies annual late review fee
• reduce the number of fees paid for ad hoc lodgments under existing requirements
• remove fees for searches conducted on the new platform, and
• provide $300,000 to the Department of Treasury to redesign wholesale business register
search services facilitated by third-party services.
Source: Budget Paper No 2, p 6.
Tax exemption for Australian sovereign wealth fund extended
Wholly owned Australian incorporated subsidiaries of the Future Fund Board of Guardians will be
exempt from corporate income tax.
The current income tax exemption applying to the Future Fund Board does not extend to its
wholly owned subsidiaries. As a result, these subsidiaries pay corporate income tax and
subsequently refund it to the Future Fund Board through franking credits attached to the
dividends paid.
The measure will have effect from the subsidiaries’ first income year after assent of the enabling
legislation.
Source: Budget Paper No 2, p 20.
Excise and customs duty
Temporary reduction in fuel excise
From 12:01 am on 30 March 2022, the excise and excise-equivalent customs duty on petrol and
diesel will be reduced by 50%. The reduction in fuel excise will be in place for 6 months, ending at
11:59pm on 28 September 2022.
The 50% reduction will reduce the excise from 44.2 cents per litre to 22.1 cents per litre, and
applies to petrol, diesel and all other fuel and petroleum-based products except for aviation fuels.
For businesses who usually claim fuel tax credits for heavy vehicles on public roads, this reduction
in excise brings the full credit rate below the road user charge of 26.4 cents per litre. This will
effectively reduce the fuel tax credits down to zero for 6 months.
Source: Budget Paper No 2, p 15; Glossy “Fuel Excise”.
12COVID-19 tariff concession to be made permanent
The temporary tariff concession for certain medical and hygiene products to treat, diagnose or
prevent the spread of COVID-19 will be made permanent.
In addition, the range of products eligible for the “free” rate of customs duty will be expanded and
the current end-use restriction will be removed. The measure will apply from 1 July 2022.
Source: Budget Paper No 2, p 6.
Excise administration to be streamlined
Administration of fuel and alcohol excise, and excise-equivalent customs duty will be streamlined.
Fuel and alcohol businesses
Fuel and alcohol businesses with annual turnover of less than $50 million will be able to lodge and
pay excise and excise-equivalent customs duty on a quarterly basis, rather than on a weekly or
monthly basis.
Businesses that import fuel and alcohol products for further manufacture or distribution that want
to defer payment of excise or excise-equivalent customs duty will be able to transfer fuel or
alcohol directly into a warehouse administered by the ATO after Australian Border Force customs
clearance. Tax on direct imports will continue to be collected by the Australian Border Force.
Aligning excise system licensing requirements
Licensing requirements across the excise system will be streamlined by:
• • removing all renewal requirements for excise and excise-equivalent customs goods licences,
removing licence fees, enabling the ATO and Australian Border Force to issue entity-level
licences in addition to site-level licences, and providing blanket permission to move goods
between sites controlled by licensed businesses
• • removing onshore producers of crude oil and condensate from the excise system until and
unless they exceed the relevant production threshold to be liable for excise payments
• • extending the time limit to apply for a refund of excise overpayments from 12 months to 4
years after payment, and
• • creating a public register of excise and excise-equivalent customs goods licences
administered by the ATO.
Excise and excise-equivalent customs duty for fuel
Amendments will be made to the excise and excise-equivalent customs duty regime for fuel to:
• introduce a refund provision for excise-equivalent customs duty on petroleum-based oils used
in the further manufacture of petroleum lubricants, ending double taxation of these oils
• remove the requirement to pay and subsequently claim fuel tax credits in respect of excise or
excise-equivalent customs duty on fuels used in domestic commercial shipping, and
• set a single rate for businesses to calculate and claim Vapour Recovery Unit refunds.
13A targeted exemption from excise licensing requirements will also apply for licensed hospitality
venues to fill beer from kegs into sealed, non-pressurised containers of no more than 2 litres
capacity that are not designed for medium to long term storage.
The changes will apply from 1 July 2023.
Source: Budget Paper No 2, pp 7–8.
Superannuation
Extension of the reduction in superannuation minimum drawdown rates
The halving of the superannuation minimum drawdown requirements for account-based pensions
and similar products will be extended for a further year to 30 June 2023.
The minimum drawdown requirements determine the minimum amount of a pension that a
retiree must drawdown from their superannuation in order to qualify for tax concessions.
Source: Budget Paper No 2, p 28.
Innovation
Agricultural innovation: expansion of “patent box” tax concession
Corporate income from the commercialisation of patents and eligible Plant Breeder’s Rights
(PBRs), issued from 29 March 2022, in respect to agricultural and veterinary chemical products will
be taxed at an effective rate of 17% to the extent that the R&D took place in Australia, for income
years starting from 1 July 2023.
Eligible patents are linked to agricultural and veterinary (agvet) chemical products listed on the:
• Australian Pesticides and Veterinary Medicines Authority (APVMA), or
• PubCRIS (Public Chemicals Registration Information System) register
Finalisation of the detailed design of the “patent box” expansion to agriculture will be subject to
industry consultation.
The “patent box” concession was announced in last year's budget in relation to assessable income
derived from exploiting a medical or biotechnology patent. Treasury Laws Amendment (Tax
Concession for Australian Medical Innovations) Bill 2022 introducing new Div 357 into the ITAA 97
was introduced into Parliament on 10 February 2022.
Source: Budget Paper No 2, p 22.
14Low emissions innovation: expansion of “patent box” tax concession
Corporate income from the commercialisation of patents, issued from 29 March 2022, that have
the potential to lower emissions to the extent that the R&D took place in Australia, will be taxed at
an effective rate of 17% for income years starting from 1 July 2023.
Patented technology that is considered to reduce emissions in the 140 technology areas listed in
the Government’s 2020 Technology and Investment Roadmap Discussion Paper or included as
priority technologies in the Government’s 2021 and future annual Low Emissions Technology
Statements are potentially eligible for the concession.
Finalisation of the detailed design of the “patent box” expansion to low emission technologies will
be subject to industry consultation.
The “patent box” concession was announced in last year's budget in relation to assessable income
derived from exploiting a medical or biotechnology patent. Treasury Laws Amendment (Tax
Concession for Australian Medical Innovations) Bill 2022 introducing new Div 357 into the ITAA 97,
was introduced into Parliament on 10 February 2022.
Source: Budget Paper No 2, p 23.
Medical and biotechnology innovation: expansion of “patent box” tax concession
The “patent box” tax concession announced in the 2021 Federal Budget in relation to assessable
income derived from exploiting a medical or biotechnology patent was introduced into Parliament
in Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022
introducing new Div 357 into the ITAA 97 on 10 February 2022. The introduced Bill expanded the
original “patent box” to eligible patents issued in the following overseas jurisdictions with
equivalent patent regimes:
• IP Australia
• utility patents issued by the United States Patent and Trademark Office (USPTO), and
• European patents granted under the European Patent Convention (EPC).
The measure once enacted will apply in respect of income years starting on or after 1 July 2022 to
income attributable to R&D conducted in Australia. See Explanatory Memorandum Treasury Laws
Amendment (Tax Concession for Australian Medical Innovations) Bill 2022.
Source: Budget Paper No 2, p 24.
Tax administration
PAYG instalment systems to be modernised
Companies will be able to choose to have their PAYG instalments calculated based on current
financial performance, extracted from business accounting software, with some tax adjustments.
15The government will consult with affected stakeholders, tax practitioners and digital service
providers to finalise the policy scope, design and specifications of this measure.
Subject to advice from software providers about their capacity to deliver, it is anticipated that
systems will be in place by 31 December 2023, with the measure to commence on 1 January 2024,
for application to periods starting on or after that date.
Source: Budget Paper No 2, p 21.
Reporting of taxable payments reporting system data
Businesses will be allowed the option to report taxable payments reporting system data (via
accounting software) on the same lodgment cycle as their activity statements.
Subject to advice from software providers about their capacity to deliver, it is anticipated that
systems will be in place by 31 December 2023, with the measure to commence on 1 January 2024,
for application to periods starting on or after that date.
Consultation with affected stakeholders, tax practitioners and digital service providers will take
place to finalise the policy scope, design and specifications of the measure.
Source: Budget Paper No 2, p 28.
Digitalising trust and beneficiary income reporting and processing
Trust and beneficiary income reporting and processing will be digitalised, by allowing all trust tax
return filers the option to lodge income tax returns electronically, increasing pre-filling and
automating ATO assurance processes.
The measure is proposed to commence from 1 July 2024, subject to advice from software
providers about their capacity to deliver.
Source: Budget Paper No 2, pp 18–19.
Enhanced sharing of STP data
IT infrastructure will be developed to allow the ATO to share single touch payroll (STP) data with
state and territory revenue offices on an ongoing basis.
The government will commit $6.6 million for this measure. Funding has already been provided for
by the government. The funding will be deployed following further consideration of which states
and territories are able and willing to invest in their own systems and administrative processes to
pre-fill payroll tax returns with STP data, to reduce compliance costs for businesses.
Source: Budget Paper No 2, p 172.
16ATO Tax Avoidance Taskforce to be extended
The ATO will be given funding to extend the operation of the Tax Avoidance Taskforce by 2 years
to 30 June 2025.
The taskforce was established in 2016 to undertake compliance activities targeting multinationals,
large public and private groups, trusts and high wealth individuals. The taskforce also scrutinises
specialist tax advisors and intermediaries that promote tax avoidance schemes and strategies.
The ATO’s total resourcing requirement, including for the delivery of the extension of the Tax
Avoidance Taskforce, will be settled as part of the independent review of the ATO’s ongoing
resourcing requirement announced as part of the 2021–22 MYEFO measure titled Australian
Taxation Office – continuation of compliance programs and independent resourcing review.
Source: Budget Paper No 2, p 29.
Deferral of 2019 Budget measure on Australian Business Numbers
The start date of the 2019–20 Budget measure requiring holders of Australian Business Numbers
(ABNs) with an income tax return obligation to lodge their income tax return and to confirm their
ABN status annually, will be deferred by 12 months to assist with integration into the Australian
Business Registry Services (ABRS).
Source: Budget Paper No 2, p 18.
Not-for-profits
Additions to deductible gift recipients list
The following organisations have been approved as specifically listed deductible gift recipients
(DGRs):
• Melbourne Business School Ltd from 1 July 2022
• Advance Global Australians Ltd, subject to being registered with the Australian Charities and
Not-for-profits Commission, from 1 July 2022 to 30 June 2027
• Leaders Institute South Australia Inc from 1 July 2022 to 30 June 2027
• St Patrick’s Cathedral Melbourne Restoration Fund, from 1 July 2022 to 30 June 2027
• numerous entities related to Community Foundations Australia from 1 July 2022 to 30 June
2027. Entities whose governing rules permit a use of funds beyond that permitted for
entities endorsed under the DGR categories in the tax law will not be listed. Listed entities
will also need to demonstrate that they will maintain minimum annual distributions,
consistent with the current requirements for ancillary funds
The DGR listing of Sydney Chevra Kadisha will be extended for a further 2 years from 1 July 2022 to
30 June 2024.
At the request of the organisation, Mt Eliza Graduate School of Business and Government Ltd it
will be removed as a specifically listed DGR.
17Gifts from $2 made to DGRs are tax deductible.
Source: Budget Paper No 2, p 25.
Indirect tax
Indirect tax refunds for diplomatic and consular representations
The Indirect Tax Concession Scheme (ITCS) has been granted or extended to the following
diplomatic and consular representations:
• Fiji
• India
• Indonesia
• Latvia
• Malaysia
• Nauru
• Papua New Guinea (including construction and renovation of current and future diplomatic
missions and consular posts)
• Taipei Economic and Cultural Office (including construction and renovation of current and
future diplomatic missions and consular posts)
• Democratic Republic of Timor-Leste
• Tonga
• Samoa
• Solomon Islands
• United Kingdom
• Vanuatu.
The ITCS entitles representations to refunds for indirect taxes including GST, fuel, and alcohol
taxes.
Source: Budget Paper No 2, p 20.
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